For grocery brands, expanding into new categories can be a major headache

According to founders of startup brands that recently expanded into new store departments, there are hurdles to overcome to make all these moving parts work. For example, brands must navigate different supply chains to create the new lines. They also must pitch the merchandise teams on the new product concepts and why the retailer should carry them — even at retailers where the brand already sells.

All of this creates a multi-year process — and there’s no certainty of success.

Nona Lim, which launched in 2014 selling refrigerated broth and fresh noodles, is navigating how to expand its footprint into new parts of the grocery store. Over the years, founder Nona Lim said shoppers have had trouble finding its products in stores, which include a variety of refrigerated broths and fresh noodles in the refrigerated section. Earlier this year, the company added instant noodles and frozen heat-and-serve meals like Filipino pork adobo and Singaporean chicken curry. Despite having existing relationships with national grocery chains, Lim said the company had to start back at square one and pitch these new prepared entrees.  

“These new categories are exciting opportunities for us, but they’re also challenging,” Lim said. “We’ve now gone into meat, which we hadn’t done before.” 

New hurdles included sourcing meat, Lim said, which has volatile pricing that goes up and down more often than dried goods. “We’re having to manage all that [production] and also reach out to new buyers in different departments,” she said. 

The process differs for every retailer, Lim said, but it’s akin to a shelf reset and doesn’t guarantee placement. For Nona Lim, the transition from mostly pantry and fridge ingredients to the frozen meals section in the same store meant working with different merchandising teams — an experience akin to a brand entering an entirely new store. That also means a longer period of coordinating to get on the shelf. The retailer may know of the brand’s other products but a new merchandising team doesn’t necessarily have relevant success metrics to go off of.

“If you’re new to a category you wouldn’t have historical data from Spins or IRI to present,” she said. This can be a harder sell to more risk-averse retailers that prefer to wait to take on new products until velocity is achieved at other retailers.  

Nona Lin isn’t the only brand that found moving between the freezer, fridge and non-perishable sections of the store time-consuming. 

When frozen treats brand GoodPop was looking to expand into beverages, it was the company’s first venture outside of the freezer aisle. Last August, the company’s canned bubbly juice line hit shelves after years of development and preparation for retail distribution.

“While we’ve been associated with frozen treats, we’ve also been known for cleaning up classics for families in categories that are traditionally sugar or water,” GoodPop founder and CEO Daniel Goetz told Modern Retail. Popsicles have always been essentially sugar and water, so creating a better-for-you alternative to sugary kids’ drinks seemed like the next logical expansion.

Despite selling at thousands of locations across the country since its launch in 2009, the product diversification process came with its own headwinds. For example, settling on the right branding and packaging is also a big undertaking.

“The beverage category is way different than frozen novelties in so many ways,” Goetz said. The first challenge was finding a positioning in a crowded category. “Kid’s beverages, shelf-stable juice, carbonated soft drinks and sparkling water are actually four different categories, with four different category reviews,” he said. As such, the company had to make a product that looked “kid” enough for the kid’s beverage section, without making it exclusively branded for children. “That was a challenge and is one we’re still iterating on today, two years later,” he said.

Ultimately, it did work out, after about three years of effort. Early retailers that carried the beverage line were Sprouts, Costco in the Northeast and Midwest and Whole Foods across the South. It has since expanded to GoodPop’s other national retail partners. 

Even before starting the 12-month-long R&D process, Goetz said the company had been thinking about this concept for two years. That consisted of testing a preservative and added flavor-free beverage that’s also shelf-stable and actually tastes good. Goetz said the brand’s roadmap consists of trying to create healthier products for families in popular categories. “If we continue to be trusted and known for this, I feel GoodPop will translate well in and out of frozen,” Goetz said. 

These lengthy and expensive steps are why some companies start contacting retailers before conceiving new products. 

For instance, when Haven’s Kitchen — known for its fresh sauces — was developing its shelf-stable aioli line, the company began reaching out to existing retailers to gauge interest in carrying it. Founder Ali Cayne said this proactive approach helped the company secure placement at Whole Foods and Target this spring.

“I would say that the earlier you can engage with a merchandising team the better,” Cayne said. “They know a lot about their shopper, what else they’re bringing into the set, and where you can add value.” 

For younger companies trying to scale by expanding into new categories, it can be difficult to coordinate new products and retail launches. Aside from accounting for long wait times to get on the shelf, the placement process can take just as much effort as the initial launch at a given retailer. “These are some of the things that I think new brands don’t take into consideration when planning new innovation launches,” Lim said.